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3/12/11

Highly recommended is the twitterfeed of@arclight who knows the field expertly (just check out his tweets and they'll leave you in little doubt) and is out there informing and keeping it real. There's no hyperbolic spin given out on either side of this serious situation by arclight, just facts and reasonable interpretations.

The unfolding situation in Japan isn't one that truly falls under the scope of this blog, so although it's consuming far too much of my screentime this morning it's best left to other places and smarter voices for commentary. However, a couple of random thoughts.

1) Any statement along the lines of "there is no need for alarm" does not jive with images of a large explosion at a nuclear power plant. It matters not whether radiation levels are reported to have dropped afterwards or that authorities tell us the main metal reactor wall was undamaged by the blast. Let's be clear here: There is every cause for a lot of alarm.

2) By a combo of geographical focus, ignorance and plain luck, your author doesn't hold much in the way of U exposure in the junior market. This may turn out to be a good thing, as anyone involved in the sector around the 3 Mile Island can testify. Talk to those guys and you'll hear how sector funding turned itself off like a spigot from one week to the other and it didn't matter a jot whether the decisions taken were rational or otherwise. I do feel a little callous about turning my thoughts to capitalism and markets at this early stage, but it's a reflection I have on the matter, so I'm noting it down here and being done.

And now I have a weekly to write. So I'd better get on with it and tear myself away from events that really deserve the undivided attention of us all.

Update: Reader AS sends in the following re-printable Stratfor piece:

A March 12 explosion at the earthquake-damaged Fukushima Daiichi nuclear power plant in Okuma, Japan, appears to have caused a reactor meltdown. The key piece of technology in a nuclear reactor is the control rods. Nuclear fuel generates neutrons; controlling the flow and production rate of these neutrons is what generates heat, and from the heat, electricity. Control rods absorb neutrons — the rods slide in and out of the fuel mass to regulate neutron emission, and with it, heat and electricity generation. A meltdown occurs when the control rods fail to contain the neutron emission and the heat levels inside the reactor thus rise to a point that the fuel itself melts, generally temperatures in excess of 1,000 degrees Fahrenheit, causing uncontrolled radiation-generating reactions and making approaching the reactor incredibly hazardous. A meltdown does not necessarily mean a nuclear disaster. As long as the reactor core, which is specifically designed to contain high levels of heat, pressure and radiation, remains intact, the melted fuel can be dealt with. If the core breaches but the containment facility built around the core remains intact, the melted fuel can still be dealt with — typically entombed within specialized concrete — but the cost and difficulty of such containment increases exponentially. However, the earthquake in Japan, in addition to damaging the ability of the control rods to regulate the fuel — and the reactor’s coolant system — appears to have damaged the containment facility, and the explosion almost certainly did. There have been reports of “white smoke,” perhaps burning concrete, coming from the scene of the explosion, indicating a containment breach and the almost certain escape of significant amounts of radiation. At this point, events in Japan bear many similarities to the 1986 Chernobyl disaster. Reports indicate that up to 1.5 meters (4.9 feet) of the reactor fuel was exposed. The reactor fuel appears to have at least partially melted, and the subsequent explosion has shattered the walls and roof of the containment vessel — and likely the remaining useful parts of the control and coolant systems. And so now the question is simple: Did the floor of the containment vessel crack? If not, the situation can still be salvaged by somehow re-containing the nuclear core. But if the floor has cracked, it is highly likely that the melting fuel will burn through the floor of the containment system and enter the ground. This has never happened before but has always been the nightmare scenario for a nuclear power event — in this scenario, containment goes from being merely dangerous, time consuming and expensive to nearly impossible. Radiation exposure for the average individual is 620 millirems per year, split about evenly between manmade and natural sources. The firefighters who served at the Chernobyl plant were exposed to between 80,000 and 1.6 million millirems. The Nuclear Regulatory Commission estimates that exposure to 375,000 to 500,000 millirems would be sufficient to cause death within three months for half of those exposed. A 30-kilometer-radius (19 miles) no-go zone remains at Chernobyl to this day. Japan’s troubled reactor site is about 300 kilometers from Tokyo. The latest report from the damaged power plant indicated that exposure rates outside the plant were at about 620 millirems per hour, though it is not clear whether that report came before or after the reactor’s containment structure exploded. This report may be forwarded or republished on your website with attribution to www.stratfor.com

UPDATE 2: A final chunkette and we're done. Here's a mail received from long-standing reader RB, a person with an opinion I always listen to. As usual, he makes good points

"2) By a combo of geographical focus, ignorance and plain luck, your author doesn't hold much in the way of U exposure in the junior market. This may turn out to be a good thing, as anyone involved in the sector around the 3 Mile Island can testify. Talk to those guys and you'll hear how sector funding turned itself off like a spigot from one week to the other and it didn't matter a jot whether the decisions taken were rational or otherwise. I do feel a little callous about turning my thoughts to capitalism and markets at this early stage, but it's a reflection I have on the matter, so I'm noting it down here and being done."

Nothing to apologize for - when you train your mind to draw inferences from events, you automatically consider these things.

I agree up to a point - we'll definitely see a sell-off and anyone aiming to build nuclear plants in the US or anywhere with a strong green lobby is probably toast, but there's one element to the equation that wasn't there the last time around: China. I expect they'll use the opportunity to pick up companies on the cheap, especially those with production or proven deposits outside the USA. The other thing that comes out of this is reduced supply, which over time means much higher u308 prices. I dare say this puts a bid under coal as well.

Moral dilemmas confront us at every stage of our lives, but there's a difference between reacting to an event, as opposed to taking advantage. Taking advantage is when you turn a blind eye to abuses of the kind you document in your blog. Reacting is simply recognizing the likely course of events and positioning yourself accordingly. Both are part of the capitalist equation, but not exclusive to it. Human nature is what it is, and any other system of arranging our affairs will produce the same, or worse results.

3/11/11

The routine-jarring newsflow out of Japan has taken the wind out of my sails today, to be frank. However, by some quirk of fortune one of the new Radiohead album tracks, named Codex, manages to evoke the day and captures far more than just a few bars of music and a bunch of lyrics. Utterly, utterly sublime music that is sad and uplifting at once.

Here are the words. I hope you listen to them. Best wishes to Japan on a very difficult day for the country.

Sleight of hand,
Jump off the end.
Into a clear lake,
No one around.

Just dragonflies,
Flying to the side.
No one gets hurt,
You've done nothing wrong.

Slide your hand,
Jump off the end.
The water's clear and innocent.
The water's clear and innocent.

...what with my own portfolio and IKN Weekly recos taking a good whacking this morning as well, but I couldn't help having a rare old chortle when, out of the corner of my beady eye, I saw ECU Silver (ECU.to) trading under a buck this morning.

After all the braindead squawking from the GATA pair Bill Murphy and Wistar Holt, after all the bullshit smoke'n'mirrors NRs out of the company in recent times, after all the paid shilling from Mexico Mike, the company can't escape the hard reality of the stock market indefinitely. And with silver wildly above $30 an ounce too...hoodathunkit, eh?

Go out and make good and bad trades in the market folks, just like me, just like others. But listen on just this company please; ECU Silver (ECU.to) is the epitome of a stock that is constructed and exists for suckers. It has every single ingredient of the stock that greenhorns will gravitate towards and unless you actually learn about the ways of the market and move beyond your initial positive conclusions for ECU.to (and others like it) by understanding earnings reports and how financials affect results, you'll always be stuck at stage one of your personal learning curve and never make it as a successful investor in mining stocks. That's all.

Hoorah! Today is 'Peru Day' over at the NYSE, so if you haven't heard already here's the official EngLang blurb from Peru's state news agency, Andina:

"New York City, Mar. 11 (ANDINA). Government officials and business executives from Peru will gather Friday at the New York Stock Exchange (NYSE) to participate in the first annual Peru Day. The event, hosted by the Peruvian Business Council and sponsored by BlackRock, Deutsche Bank, Financial Times and NYSE Euronext, will provide an opportunity for Peruvian officials and corporate leaders to share insight into Peru’s capital market, economic outlook, investment opportunities and business environment. "Peru’s Minister of Economy and Finance, Ismael Benavides, will ring the NYSE Closing Bell on Friday to commemorate Peru Day..." CONTINUES HERE

All happy happy media exposure thrusting new economy stuff and a pretty new logo to boot (got Nazca lines flavours and combos the national flag colours well) to get stuck on future promo campaigns and exports. However, IKN would also like to feature the following photo from Peru website PeruFail this morning that shows the real amount of planning and foresight that is used on a daily basis in the country:

In case of fire, break paving stones. This is the real Peru. Pisco sours served, the end.

Scotia daily mining scoop e-mail has a smart rundown of market implications of the Japan earthquake this morning and includes this point as one of the things to watch:

c)Nuclear Plants:The International Atomic Energy Agency’s Incident and Emergency Centre noted that four of Japan ’s nuclear power plants located near the quake-impacted area have been shut down and that a fire at the Onagawa nuclear plant has been extinguished. However, it also noted that “a heightened state of alert has been declared at Fukushima Daiichi nuclear power plant”. Something to keep an eye on considering earthquake and terrorist attacks are often cited as risks by nuclear power opponents. http://news.smh.com.au/breaking-news-world/no-radiation-leaks-from-japan-nuke-plants-20110312-1brnk.html

Your author's thoughts immediately turned to Chile and its rising star politico, Mining and Energy Minister Laurence Golborne, currently riding a continued wave of popularity after being the centre of the successful rescue of "the 33". Golborne has recently been a strong proponent of nuclear power for Chile and has also minimized the potential dangers of earthquake risk to such a strategy (and we're talking Chile here folks, land of serious shakers).

...the biggest earthquakes recorded since 1900, using data from the USGS and the Mag scale:

Today's was big, people. The 5th biggest quake ever recorded. Let's remember how fortunate we are to live boring lives.

UPDATE: Oh crap

For those wondering, the tsunami forecast for the coast of South America at the moment isn't very drastic but might cause some minor damage. The surge is being called at between 1m and 4m with an ETA of 7:30pm EST. Meanwhile, my heart goes out to the people of Japan, particularly the owners of these ex-houses.

Grandich Publications LLC provides corporate communications services to public and private companies in North America and specializes in the development and management of customized public relations and marketing programs. The principal of Grandich Publications LLC, Mr. Peter Grandich, is a long-standing member of The New York Society of Security Analysts and The Society of Quantitative Analysts and is the editor of The Grandich Letter, first published in 1984.

Under the terms of the agreement, Ridgemont will pay Grandich Publications LLC a monthly fee of US$2,000 and will grant 200,000 incentive stock options to Peter Grandich, managing partner of Grandich Publications LLC. The options are exercisable at a price of CDN$1.11 each, with such options vesting over a twelve month period, and expiring on the 9th day of March, 2016. The agreement is for an initial term of 12 months. The agreement is subject to regulatory approval and all terms are subject to and in accordance with the rules of the TSX Venture Exchange.

So Peter Grandich gets another promo gig, good for him. The NR was signed off by RDG.v President and CEO, Mark J. Morabito. Fair enough, so let's just check to see if there are any previous relationships between the vehicles pumped by Peter Grandich and Mark Morabito:

Now isn't that just the strangest coincidence? Peter Grandich decides that not one, not two but six companies that have Mark Morabito as a company officer are worthy of his professional services and good enough to present as live investment prospects to his flock. But hey...move along now...nothing to see here...

I get quite a lot of this type of thing below (surprised, huh?), but just for today and while I'm feeling all "come-peek-round-the-curtain", here's an example of an exchange between your humble scribe and a blog reader. We start with reader 'BS' (no kidding, those really are his initials and his full name was supplied) and his 'vociferous defence' of Peter Grandich after today's post by Grandich from your humble scribe. We then move to the reply and following that what was served up by BS afterwards. Further comment is minimized as this humble corner of cyberspace prefers to treat its readers as adults rather than spoonfeed them. Finally, please be clear that I asked for and was given permission to reprint the both mails written by 'BS'.

Reader BS writes:

The fact that you not only bash Peter Grandich but also many others in the mining community makes you the A-hole sir, not them! They didn’t start the shit, you did! You’re the one who looks bad, not them!

Otto replies:

Dear (Name),

1) Would you give me permission to reprint your mail on my blog? Refusal will not offend and unless permission is given, it will not be used.

2) The word is "asshole" (or "arsehole" if you prefer UK-type English).

3) How's FCO.to working out for you? Never bothered you that Grandich was being paid by FCO all the time he was pumping it to the world? Or EVG.v? Or a host of others, in fact.

Thanks for your mail, your opinion is appreciated (unlike in many other places).

Reader BS then replies:

1) Yes, if you’d like.

2) Yes, I know what the word is but I thought I’d use the shortened version as it’s a nicer way of saying it, and after all, I am a nice person.

3) I didn’t buy FCO.to, as a person can’t buy them all. Having said that, I can tell you that I’ve made tens of thousands of dollars off the FREE suggestions of companies in Peter’s blog. As I am a subscriber with Gary at Biiwii, the only company I bought which I know came from you at the time was mid-2008 when I bought VEM.to for $0.39 which subsequently tanked. So you’re perfect? Fortunately, I had a stop loss in so wasn’t hurt too badly.

As far as I’m concerned, if certain resource companies decide to engage Peter Grandich and pay the guy $20,000 or $30,000 a month for that, who the hell would refuse? I know I wouldn’t. If Peter Grandich has said it once, he’s said it a hundred times including today. “Failure is the norm in the junior resource business and if you buy those companies you are speculating, which is gambling, so be prepared to lose some or all your money.” The responsibility goes only to the individuals who choose to buy those types of companies.

FYI, the following is an email I sent to Gary at Biiwii on Feb. 25th:

“Gary:

I know you meant well on your post about the “3 Amigos”, and as it’s been on my mind for some time, I felt compelled to respond. As I found it to be a small pain to comment on your blog, thought I’d email instead.

Mickey Fulp and the Metal Augmentor may be very nice fellows and I’m sure they are, but as I occasionally read Otto Rock’s blog being a PM investor, I’m not sure how anyone could say the same for him, with all due respect to you and your opinion. To see him continually calling the likes of anyone from Casey Research, anyone from GATA, Peter Grandich, Mike Kachanovsky, etc, etc, nothing but scumbags, scammers, pump and dump artists and the like, well, I’m sorry but I find it difficult to have any respect for a man like that. Peter Grandich is a Christian, a nice man, and I’ve made tens of thousands of dollars off his free mentions of mining companies that he makes on his blog. But to see someone like Otto Rock, with his idiotic and immature rants teeing off on so many members in the mining area is quite simply a little hard to take. I honestly don’t know why a person has to resort to that type of behaviour. I read tons of articles and blogs and I don’t know of one other person out there who does anything like that. And I wouldn’t subscribe to anyone who does. Hopefully on his one month vacation he took a look into a mirror at least once.”

Otto, really and truly, why don’t you just stick to what should be the only two things to talk about on your blog. That being LatAm issues and resource stocks!

Last serving of Otto:

That was was great, too! Can I use this second mail of yours, too? I'm glad to see you have a high opinion of yourself. Oh by the way, apportioning blame for your bad VEM trade via something written somewhere else is not a smart investment attitude. I've been on VEM since 18c and 21c, been reco'ing it since then, have the dated publications to prove it and continue to recommend it. One reason is that it's not a scam and refuses to bend over and lube itself to the Canadian brokerage system and its innumerable parasites that you seem to prefer. Hey, takes all sorts I suppose....

And as is correct we allow the aggressor to have the last word (experience has taught that if you don't these things go on forever). Here's BS:

Sure, fly right at it big guy! BTW, I did 41% last year so I’m not complaining. On another note, it’s unfortunate we live so far apart. I’m sure we could be best buds!

IKN back. So if you feel like spicing up your day and mailing over your slice of vitriol, go ahead knock yourself out and be like BS too. But do yourself a favour and find out how to use an exclamation mark correctly first, yeah? It'd make your mail that much easier to read this end. Oh, and don't expect a reply because normally I can't be bothered. Mojitos served, the end.

So today I get mailed by 'Wiley', a mining pro from up North (anonymity is part of the gig with this post folks, which is the way it is but I stand by the source in question and the info contained totally after doing the necessary backchecking). The mail was prompted by IKN's recent coverage of pal James West, bullshit promo pump artist and the guy behind the recent transfer of wealth between the retail investment community and those at Seafield Resources (SFF.v), and went into detail about Wiley's knowledge and experience of James.

His mail was so good that I asked this peer respected mining pro whether we could run it on the blog. What results is an altered version of the first mail, still containing plenty of the original but by necessity removing some of the more personal intel and also clues to the ID of Wiley. So here it is:

"I am a geo, working up north. A few years back I spent a regrettable half-day with "guru" James West, who at the time was a consultant in how to formulate a strategy for optimally pumping a junior mining stock. His method mainly involved making sure the headline for every press release always contained large numbers - the maximum possible for grade, width, whatever. He did not seem at all interested in any geological or logistical aspects of the project. Just how to manipulate the stock price upward (or keep it up) over a period of several months by a planned sequence of news releases, within the context of a good overall story.
Anyways, the guy is a total ass. Very rude, obnoxious, aggressive and with a ridiculous amount of phony-seeming macho. He knows very little about exploration or mining, just about telling "fairy" tales about junior companies." Wiley.

Just so you know what real mining people think of this charlatan. Also, doesn't that James West strategy marked out by Wiley ring right on the button when you look at how the SFF.v pump unfolded?

So the stock West screamed "accumulate to $1" in the December pumpo now trades at 33c. Funny dat, innit? DYODD.

A good report out of Desjardins this morning that goes beyond the headline drop in China copper imports and sees that it's really not that gloomy at all, though let's be clear that the Desjardins position on copper is strong bullish and has been for quite a while. Anyway, the analysis by Redstone & Co stands up to scrutiny, unlike the armwaving "we're all gonna die" feeling out there in the whacky world of markets this morning (you'd never guess that gold was selling at over $1.4k/oz, would yaz?).

Metals & Mining Seasonality in Chinese trade data -- John Redstone (514) 2XXXXXXXX john.redstone (AT) vmd (DOT) desjardins (DOT) comImpact: NeutralMetal stocks may come under pressure today following the release of Chinese trade data for raw materials for February 2011. In particular, unwrought copper imports for February fell 35.4% mom and 26.9% yoy. Firstly, we should point out that this figure includes imports of copper alloy, semi-fabricated products and unrefined smelter product, as well as refined metal. The import level for refined metal alone will not be released for another two weeks. Furthermore, we would point out that the year-to-date total (ie January plus February imports) is down only 2.4% yoy. The data is distorted by the timing of the one-week Lunar Holiday--which this year fell in early February. In addition, we understand copper consumers temporarily reduced orders before the Lunar Holiday because of the difficulty in obtaining financing for copper, which is currently at historically high prices.We hear that this situation has been rectified and orders have risen sharply in early March. We would suggest that, given the quality of the data, a 2.4% yoy drop is statistically insignificant, ie shipments of copper to China in the first two months of 2011 were roughly unchanged year-over-year. This is in line with our forecast for Chinese copper imports of 2.9 MMT in 2011, the same level as 2010. Consequently, we would suggest that any pressure on the stocks of copper producers that results from this data is unwarranted and presents a buying opportunity. We should also point out that year-to-date iron ore imports into China rose 22.6% yoy. We expect Chinese imports of iron ore to rise 10% in 2011 to 680 MMT. (To view tables, please click on link to pdf attachment below.)Please see the Desjardins research website www.desjardins-securities.ca for complete company specific disclosures, analyst certification and legal disclaimers.

...as its constant, Cassandra-like, doom'n'gloom shilling isn't easy to swallow whole, but if this article is even half true it's a seriously interesting situation. Inflation rally, anyone? Here's an excerpt, click through for the rest:

"And many thought Bill Gross was only posturing when he said he is getting the hell out of dodge. Based on still to be publicly reported data by Pimco's flagship Total Return Fund, the world's largest bond fund, in the month of January, has taken its bond holdings to zero (and -14% on a Duration Weighted Exposure basis). The offset, not surprisingly, is cash. After sporting $28.6 billion in "government related" securities, TRF dropped to $0.0, while its cash holdings surged from $11.9 billion to a whopping $54.5 billion (based on total TRF holdings of $236.9 billion as of February 28). This is the most cash the flagship fund has ever held, and the lowest amount in Treasury holdings since January 2009 before it was made clear that the Fed was going to adjust QE1 to include Treasurys in addition to Mortgage Backed Securities."CONTINUES HERE

By the way, whoever this version of Tyler Durden is, he's wrong about the direct consequewnces of non-QE3...you people still can't get it into your head that the world doesn't revolve around the USA any longer, can you?

The good news is that he's perfectly aware there's at least one place on the interwebnetpipes that isn't taken in by his bible-bashing, holier-than-thou shepherding bullshit and self-serving parasitical habits around junior miners....and what's more, he seems to have a bug up his tush about the site as well. Your author thanks reader 'R' for the headsup and excerpts from the March 9th Grandich letter:

"I have stated most recently that the few individuals who use the Internet to make unsubstantiated claims about me never once have said such in any public forum or to my knowledge to any proper authority. I never engage them and from time to time remind supporters it’s a waste of time to do so because they will never come out into the light of day. Even a third-rate (and that’s a far higher rating than he truly deserves) newsletter writer/blogger (who can’t even pay a few bucks to have his own site but blogs on Google) attacks me and many others from the comfort of thousands of miles away in South America. Like the others, his accusations and rants are not just vulgar, but are obviously done with a skirt on. To engage these poor souls would only play into their world and my maker said I was to be in the world but not of it (Praise God!)."

Yup, amen to that, bro. Just that you're aware of this blog's existence makes my day, Grandich. By the way Petey, just a little point but here we go with reasons for me sticking to a blogspot URL

Only dumbasses care

Google blogger is a very good service and there's no need for a dose of social cachet to be dolloped on the world by having a trendy addresss....unless you're a dumbass of course (see point 1)

Because it's inside the Googlypeople's world it can't be hacked, a little matter that annoys the people who have gotten rich on the backs of others and are now afraid of seeing truth spilled out about their two-faced worlds. Know anyone like that?

Your ridiculing of a Google Blogger URL says much more about you than it does about me, dude. It also sounds like you think there's something second-grade about South America, so would you like to expand on that point please? For the record, I live here out of choice and not necessity as it's far more pleasant than the screwed-up Northern Hemisphere....for one thing, people are genuine and don't just fake friendship with strangers.

PS: How do you know I'm a third-rate newsletter writer, Pete? You're not on the subscription list, so has somebody been bunging you my original ideas so that you can rip them off?

3/9/11

For as long as this humble scribe can remember, Uruguay has always been referred to down this way as "The Switzerland of South America" due to its tax haven status for foreigners and banking laws that offer tight secrecy to those who deposit cash there (before writing this post I even found a few articles in English linking Uruguay to Switzerland this way, here'sa decent example). So as day follows night, Uruguay has always been home to monetary assets held by...let's say...the more dubious end of South America's wealthy (with the slushy end of Argentina's net worth particularly keen on holding acounts there).

So it came as little surprise to your humble scribe today to find out that Doug Casey is relocating to Montevideo soon. Remember where you heard it first, folks.

Of the three, part one takes the most time to work out but, when you've nailed that one down things get easier. Here's a topical example:

And by the way, here are a couple of tips to get you started on part 1). Firstly, never tell the stupid people that they're stupid. Secondly (and as a logical extension to the first tip), those who go around calling other market participants stupid are stupid (present company excepted, of course).

This is why we love XKCD. I'm not reproducing today's cartoon here cos it's not really fair on clickmorality, but link over and read the strip yourself by clicking here. To be clear on this, I've also had all the thoughts (and the mouseover message) shown but have never been able to express them as eloquently.

A lot of very interesting feedback and reaction tothe post yesterday on Richard Fifer, chairman of Petaquilla Minerals (PTQ.to) so far, and for what it's worth I've spent a good chunk of this morning forwarding the original PDF to people (perhaps people with a slower download link speed are having the problems, because others get to download the 4.9Mb PDF without grief).

One point raised by a couple of mails has been "OK he did prison time for cocaine dealng but dude, it was 1975, he did his probation and may have turned over a whole new leaf" or words to that effect. Well maybe, as long as he had by then turned over a new leaf by and since then has been an upstanding member of the bizworld. Unfortuntely for the people who have had dealing with Fifer since his drug dealing days that's a crock, so next up we'll show you how he tried to defraud another member of the Panama mining community to the tune of nearly U$500,000 in the 1990's (with all the necessary documentary evidence, of course) and only got reeled in by the courts six years after the scam he pulled. New leaf my ass. Watch this space.

...the five year charts for copper spot price and copper LME warehouse inventories. First the warehouse numbers...

...and today we note that there have been more than a few examples of Emperor's New Clothes about these two charts recently, with market anal ysts and peddlers of financial dumbassery attempting to explain the future of copper via explanations of the interrelationship if the two charts. Hell, I've even been slightly guilty myself on this score, but the fact is that if you step back and take a five year view there's no real price correlation between bonded warehouse inventories and the price of copper.

Now the price chart:

Or perhaps more accurately, sometimes there is and sometimes there isn't. Which is just as useless and perhaps even more dangerous, as it might keep you coming back to this issue and making the same mistakes over and over again. When a world commodity is subject to large scale speculation the way in which copper is subjected, its inventory numbers will be part of the speculative scheme. Trust your eyes and DYODD.

3/8/11

I think we'll just go with the facts on this one. Back when Richard Fifer (Chairman of the Petaquilla Minerals (PTQ.to) and vendor of the Panama Copper project to Inmet) was a youth of 18, he spent his days selling marijuana and cocaine in the US controlled canal zone of Panama. Y'know, just like any other scumbag who wanted to get rich and didn't care how it happened. That is until he got caught, arrested, thrown in jail and sent up before the judge where he pleaded guilty to the charges of both possession and distribution.

He was given a sentence of 18 months in jail, of which 90 days was under lock-up and the other 15 months suspended under four years of probation. He kept his nose clean during his probation period and was eventually discharged from probation by the courts. So how do we know all these details about a past that Richard Glenn Fifer Jr has always been at pains to deny ever happened? Simple; we've read the court documents, checked them for veracity and found them to be factual. Now you can check them out too, by downloading a PDF of the docs from right here (the file is 4.8Mb, so give it a bit of time, yeah?).

UPDATE: A couple of people have now written in saying they've had trouble downloading the PDF file (while others have had no such problem). If you're having problems, mail me and I'll send you a copy by return (but make sure your mailbox can handle a 5Mb dump).

So today we had the lapdog Peruvian Environment Minister, Antonio Brack-Egg (crazy name, crazy guy)stating that he was looking to promote alternatives to mercury for gold extraction/refining in the enviro-wasteland Madre de Dios region. Apparently he's all concerned all of a sudden (because the disaster area is finally making headlines) and also ssay that part of his protfolio is to recover the 32,000 heactares lost to the goldrush so far.

This is utter tripe as usual. Let's look at the latest official production figures out of MDD, according to the Mining Ministry and while we do, keep in mind that the unofficial production is estimated to match the official numbers. Here's the monthly production from MDD....

...and this chart (featured before) is the one that takes official MDD production as a percentage of Peru's total product.

So yep, it's got slightly better in the last two months since that jawdropping spike, but it's still way way above the historical average for the region and there's still scant progress being made by Peru to combat this filth. The reason for that is simple enough; The bunch of two-faced moneygrabbers running the country don't give a rat's ass. DYODD

The last month has seen a whole batch of polls from various companies and, barring a couple of dubious pollsters with long histories of favouristism (eg IDICE that hearts APRA) the numbers churned out have been (not exactly but fairly) regular. Today we get one from ok pollster IMASEN that goes like this:

1) Barring a very very big upset, Toledo will make it into the two-person second round runoff (and equally large a surprise would be his garnering enough votes to win in the first round...50% +1 vote isn't in the cards).

2) It's still tight between Keiko Fujimori and Luis Castañeda for the other spot in the run-off. Keiko has had a hardcore of 19% to 22% of the vote for a long time now and it hasn't changed. Meanwhile, Castañeda has been steadily losing voter support (in the polls at least) for the last six months or so. It's his second place to win or lose, with Keiko setting a benchmark.

3) Ollanta Humala has recently moved up from a generalized 10%/12% in various polls to a generalized 13% or 14% now. He's running a good campaign, keeping his more hardcore nationalists/leftist views out of the debate and has connected very well with rank and file Peruvians during his street campaigning (perhaps on an equal footing with Toledo on that score). If there's going to be a surprise in this election, Humala is the likely cause and if he gets more momentum it'd be possible (i'd call it unlikely but possible) that he snatched the 2nd place runoff spot.

4) Whatever happens and whoever he's up against in the run-off, be clear that Toledo is now odds-on favourite to be the next President of Peru. His campaign is well-organized and slick, he's a good politico and most importantly the feeling from Peru is that many will vote for him as "the least worst" rather than a great option, simply because the others on offer are so mediocre. Ollanta has baggage from the 2006 campaign, Keiko is quite simply the daughter of Alberto and that in its itself is enough to put people off her, Luis Castañeda is about as charismatic as a wet lettuce and this has been shining clear in the campaign so far, putting people off his candidacy.

5) It's been funny to watch the PPK campaign. He gets a lot of airtime and media support (because he's right up the street of the media moguls and newspaper owners) but when push comes to shove he has little support on a grassroots level. It's refreshing to see that the media can't always bend public opinion to their collective will.

The bottom line is that IKN says Toledo gets to be President of Peru once again after a the run-off. Put a gun to my head and I'd say that he faces Keiko in that run-off, but it's really way too tight for second place between two (perhaps three) names. By the way, let's also be clear that Toledo has been the IKN tip since March 2010 when he was polling just 8.2% and stuck down in 4th place.

I'm impressed. I hold Ag exposure via the metal and some juniors, but I never thought I'd benefit this much compared to gold. It's nice being wrong sometimes.....no, scrub that: It's nice being wrong, period.

3/7/11

....a different one that goes by the public name of "T" (enlightening, huh?). He sent me the following this morning and, as it's quickly dawning on me that readers of IKN do a far better job of script than I can ever do, I got permission to paste it up here. He just said yes, so here it is:

Hi,

Just saw an announcement that Magma is going to buy Plutonic, then looked at PCC’s chart.

It’s had some spikes as high and sudden a couple of times times before, but is it coincidence that this happened just before the announcement? Another one to add to the list you posted on your blog.

Interesting that MXY is diversifying now. I have looked at PCC in the past, not closely, but on a cursory look it showed clean, and I think they’ve got some high profile financing behind them, but I haven’t looked at them recently. Maybe the She-Viking has put the fear of Elves into Beaty and he’s looking for something to offset Iceland if it doesn’t go his way?

Your friend at PDAC has given you some interesting feedback. I caught and can offer less than he did, but zipped into PDAC for a few hours.

I saw the James West “5 for 100 in 8-12 every month”, too (unless we both remember wrong), and was as “amused” as your PDAC friend.

I liked Cook’s presentation. His “bullshit” comment to the $/oz in the ground was well received by the audience, but I didn’t really think through the comment on margin per oz like your PDAC friend. I joined the scrum after he left the room, and listened to his responses as people peppered him with “What do you think of Colombia?”, “What do you think of Golden-Pile-o’-Dirt.v?”, and so on. Not a forum for in-depth responses, but I was impressed with the geo and $ knowledge he showed, his (relative) candour and his willingness to decline comment where he felt he was unqualified to do so. I need to go check out his newsletter.

Unlike Greg McCoach (I needed to sit for a bit, and he was talking), who comes across as ready with an opinion on anything and everything, whether he knows anything about it or not. He used “Golden Dildo” to describe all the juniors not worth anything. Maybe funny around a table over beers, but a bit low-grade for a public talk.

I swung by DMM’s booth a couple of times, and only managed to get Jaeger. His comments: expect one to four months for negotiations, but this is Ecuador and the government works slowly, while in practically the same breath “Robert’s a hard worker with contacts in the government who’s really great at making things happen.” Really?

I also went by MFL’s booth and tried to pump Hackshaw (again, didn’t manage to pin anyone higher up) on what he sees as blue-sky on gold production if everything went super-duper, but, as I expected, he wasn’t budging.

So I failed at squeezing anything useful out of either.

The Chilean miner escape capsule was cool. There was praise on a posterboard for the ingenuity of the engineers who designed it (actually, them – there were 3.) This makes for a nice presentation, but the design and construction were relatively simple, which is not criticism, but praise. Not trying to get too clever was probably key to coming up with a working capsule the fastest possible.

The lazyman's blogging technique is to excerpt a bit of the subcription weekly written and published the day before and stick it on the open blog and, as I'm feeling particularly soporific this fine morning, here we go with a chunk of IKN96 out yesterday that covered LatAm mining political risk. It has pretty charts and everything, so enjoy.

xxxxxxxxxxxxxxx

The LatAm part of the Fraser Institute 2010/2011 mining country risk report

Out last week, The Fraser Institute annual report is the mining industry standard on world political risk factors. As regards LatAm, here’s how the region’s countries stack up on the world scale.

Note that in 2011 Fraser surveyed 79 countries/regions for its report and the lower your score, the higher up you are on the league table and the better the place is for mining. The IKN-generated chart has colour-coded the Fraser data for easier reading and the best of LatAm is (once again and with little surprise) Chile, which is the eighth best place to go mining in the world according to Fraser. Second place goes to Mexico (35th in the world) and third place Colombia (40th place and has moved up a lot, as we’ll see in a moment). Peru and Brazil (48th and 49th) get a qualified pass and then we come to the riskier jurisdictions. Panama in 68th place does not impress anyone and let’s note that LatAm hods four of the world’s bottom five places for mining (Guatemala 75th, Bolivia 76th, Venezuela 78th and Honduras 79th).

Now we turn to the evolution of mining political risk in the region (according to Fraser) and this chart that tracks how country scores have changed in the period 2006 to 2011.

Two things to note about the above chart. Firstly, in 2006 there were only 65 world jurisdictions covered by The Fraser Institute and now there are 79, so if a country has neither improved nor deteriorated in the last five years we’d expect to see a slight downmove in its world ranking. For example, a country such as Brazil doesn’t seem to have changed that much since 2008 or so. Secondly, the main positive has been the improvement in Colombia in the period in question. Back in the 2006/2007 report, Colombia was the seventh ranked region and sat behind Chile, Mexico, Brazil, Argentina, Ecuador and Peru. This year’s report has Colombia in third place in the region with only Chile and Mexico in front of it.

A final comment or three from your author. One thing to note is the difference in attitude between last week’s general political risk qualification of Colombia as the region’s riskiest country (the Maplecroft report) compared to the Fraser judgement that Colombia is improving in strictly mining terms. Another is that the Fraser report has an information gap or two, with a particular hole in the shape of Nicaragua. Nica is a pretty friendly place to go mining at the moment (as long as you pick your in-country region wisely) as companies like B2Gold prove, but Fraser has no coverage on the country. Hopefully that will change in the years to come as the report’s scope widens further. But overall, the Fraser calls and their country ranking is one I generally agree with, bar a nitpick there or a quibble there. This section also reminds me that our quarterly update on mining risk is due some time this month (the last one came in IKN83, December 5th). We’ll get round to that once PDAC is out the way.

How's Greystar (GSL.to) doing this PDAC week? Anyone got word from Nicholas CampbellSoup about his reco SNAFU yet? Is Soupy available for comment on other Political Risk issues? Does he charge for his services at the Can of Corn?

"Greystar will only develop a project with the support of both. We will work with the relevant authorities in the review of the project in order to determine whether modifications are possible that address concerns whilst ensuring an economically viable and environmentally sustainable project."

3/6/11

...and wrote me this second mail. I get to run this one virtually verbatim, too. Enjoy.

Saw some of the speakers at PDAC today, visited some booths.

I caught the last couple minutes of Ian McAvity while waiting for John Kaiser to show up. Suffice to say, McAvity is a bull on silver to $45, a bull on oil, and thinks the S&P run is "overextended and so vulnerable". Seems a bit like one of those newsletter writers who envision a Mad Max/Terminator future of societal collapse and piles of human skulls. I might have gotten the wrong opinion.

John Kaiser's topic was "are we at a cross-roads in the resource sector?" He noted the resource supply rebuild that would have strangled a resource bull got interrupted by the 2008 crash, interesting point. And while volume on the TSX-V is higher than 2000, we still aren't seeing prices anything like the 2000 blow-off top. (Wonder if he's comparing like to like, here.) Only something like $300B out of $600T in the global economy is the global production value of mining ex-oil. (Any mistakes in figures will be mine, not his.)

But he also noted the "PDAC Curse", where 9 out of the past 10 years everyone bailed out of the resource stocks in March so they'd be out before May.

He noted that the US people's net worth curve pretty much mirrors the Case-Shiller home index. Scary.

He had another interesting point, that low s/t interest rates are destroying the baby-boomers' savings, and suggests even more evocatively that the younger generation will rise up against the boomers out of distaste at having to re-fund the boomers' retirements (through pension support, as if there was any such thing in the US - I find the suggestion of intergenerationalist revolution compelling, since we're economically back to the 70s, but the details seem to weaken the thesis). He notes pessimism drives unrest in youth, and inflation causes supply shocks which cause rioting. Well, maybe in the developing world... but the propaganda state is firmly entrenched over here and I haven't seen any signs of revolution in Canada yet.

He seems to suggest that, while China has been equating their REE supply with demand, choking out any new ex-China REE investment, they may soon be throttling it to clean up the sector - bringing a Moly-style price spike, but followed a few years after by a Moly price crash after the clean-up.

There was a large exodus from the room after Kaiser finished. He seems popular. Definitely a good speaker and someone whose "ideas intrigue me enough to subscribe to his internet newsletter", to paraphrase Homer Simpson.

I swung by the DMM booth after Kaiser. They suggested that the Ecuadoran gov't wants to get a few contracts done BEFORE June, and DMM is 1 of 3 companies in line right now. I know they pissed you off with doublespeak, but at a dumb price like $3.40, and supposed progress toward closure in this matter, wouldn't you be a buyer right now?

You respond "yeah, *supposed*." OK fine I get it.

Mickey Fulp's talk was "Resources and reserves: a primer for the lay investor". You know all that already, I knew a lot of it already. Did make a few good points. Shorter in person than I'd expect him to be. He even quoted Rick Rule, which is funny... Cookie took a question pleasantly from Rick Rule later, so I guess Rule is one of those "friend of everyone" writers? Would have liked to stick around for him, but he was on later in the afternoon and I'm still sick from the cold.

Visited your buddies Juan Vegarra and Enrique Winkelried at VEM. We chatted mostly about Macusani, which I'm interested in. He gave me the short form on the difficulty at Macusani re: the surface zone obscuring what's at depth. He's as stunned as anyone else about YEL's recent price puke - and noted the exact same thing happened when VEM went for their financing, and they went through the same financiers. Should we blame Raymond James for price-diddling?

I've been watching YEL's L2 constantly (out of fear, maybe, since I've got such a huge position without any DD), and am seeing replaceable asks pinning the price down - much like RIO during its short attack, except the guy driving YEL's price down has a lot more capital at his disposal and I can't fight him off like I did the RIO short. Considering YEL is about 50% insider & industry owned, it just looks funny. Oh well.

Anyway, VEM expect they should get some results out this week.

Funny thing - I told Juan my newsletter writer had him as a reccy - he said "who, Otto?" I said yeah, he said "That guy's hard core!" Anyway, he wants to remind you he's picking you up soon for a weekend of wild boozing.

Caught the last couple minutes of James West. I was confused by the apparent reccies of Japan and T-bills. There must have been a technical malfunction. Or maybe I was hallucinating. Or maybe he's given up on miners, since they seem to use him as tissue paper to drive a pere-financing pump.

Brent Cook repeated much of his "danger signs for the lay investor" and "price cycle of an exploreco" content. Actually, the investment fundamentals class on Saturday had much of the same content as Fulp and Cook - just with less stress on their favourite areas. He's also shorter than I expected him to be.

Funny nuff, Cookie tangentially referenced the recent Seafield pump that turned West into a used tissue. He used Batero and Bayfield (not SFF, probably since he's such a polite guy) to warn newbie investors of two tricks: smearing gold over longer intervals (yup, he brought out the interval calculator), and re-drilling historical holes. Sure, it is always good to look at a drill map when you get a new assay news release.. Unfortunately, West had already left the room.

His picks are LYD - he's expecting a 2M oz @ 1g/t resource estimate update this month - and Almaden, I guess for their JV model.

He notes one important thing - never sell when your expectations are being met. Instead, ladder in even more. That's Jesse Livermore, from 100 years ago. Copyright is lapsed, so that's fine.

Cookie's on BNN Market Call Monday night at 7PM, and asks us all to phone in with questions about GNH to try to make him crack a smile on TV.

Rick Rule was sitting up front, and asked Cook to give his own opinion of the "$/oz in the ground" metric. Cook says "quite frankly, I think it's bullshit." Cook feels the real determinant of value is margin per ounce. I personally find that a bit incoherent, given who the speaker is. How does he calculate margin for an early-stage exploreco, anyway?

Of Doody, I can't say much. The first 7 minutes of his presentation were exclusively, I mean exclusively, a pump for his newsletter. Neener neener, he beat the GDXJ? Well, *I* beat *HIM* last year (95% vs 71%), and I don't charge $1000/yr for my thoughts! I scream them out randomly at passers-by as I sit on a street corner in urine-stained combat pants with a piece of string hanging out of my mouth!

You can let Gary know that one of Doody's top picks is Yamana. 1.1M oz/yr at $200 cash costs, 1.7M oz next year, undervalued by the market. If he wants to know more, he can pay $1000 for the service.

Other than that, I swung by CPN and ARR for some propaganda. ARR basically confirmed they're not doing anything at all, so I should go tell all the speculators on Stockhouse. CPN were proudly displaying their Haywood propaganda with a target of $1, and the Cormark propaganda suggesting Rovina NAVPS at present spot Cu & Au of over $3.

Finally, my cold was too much and I had to go home. So I left Moria, and stopped off at a little bar in Ruins of Undermountain (bet you don't get that reference) for a few double vodka & lemons to give me the strength to get home.

Now I'll spend a day or two trying to fight off the virus obviously given to me by unclean mining people, and nursing my poor dying cat

The man they call Brent Cook is the guest on BNN's Market Call Monday. The show kicks off at 7pm EST and runs for the full hour, so you have plenty chance to get the views of Cook on all things mining.

So folks, do yourself a favour and get your question into Cook via the toll-free number 1-877-667-6288 or from Toronto 416-957-8199, or if you prefer, mail in with your question to marketcall@bnn.ca because you know it makes sense.

IKN96 has just been sent to subscribers. We got news and views on a whole bunch of mainly LatAm mainly junior mining stocks and even a new buy reco, all squeezed down hard and packed into 13,000 or so words over 28 pages.

Hey, remember James West? You know, that self-appointed stock guru dumbass that called "accumulate to $1" on the recent BS pump job Seafield Resources (SFF.v)....the guy that got his flock into Southwestern Resources the day AFTER the Boka gold salting scandal hit...yeah, that's the one. Well, this mail was just received from one of your author's superduper spies at PDAC concerning James West's appearance at a presentation today and IKN passes it on with no further comment.

"Apparently he pulled out a crystal ball, literally, and said he picks 5 stocks every month that will double in 12-18 months at his workshop here at pdac- Jesus Christ!

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